Diabetes nephropathy (DN) is the most important cause of kidney failure. Patients (pts) with Type 1 diabetes mellitus (DM) who develop DN have a markedly increased death rate from kidney failure, coronary artery disease and stroke. Glycemia only partly explains why some pts develop these DM complications. Further, since tight blood sugar control is extremely difficult to maintain, other efforts need to be made to reduce risks of DM complications. Renin-angiotensin system (RAS) inhibitors slow the progress of established DN. The specific aim of this study is to determine whether treatment at the early stages of DM can slow or stop DN structural changes. The long-term objective is to prevent DN from developing. Two hundred eight five pts ages 16-59 with 2-29 yrs of Type 1 DM and no renal functional abnormalities have been randomized into a parallel, double-blind, placebo-controlled study involving 3 groups (95 pts/group). Each group receives an angiotensin-converting enzyme inhibitor (ACEI) (enalapril), or an angiotensin II receptor blocker (losartan), or placebo. All pts have their usual DM management. Baseline studies included measures of glomerular filtration rate (GFR), urinary albumin excretion rate (UAE), blood pressure (BP), and a percutaneous renal biopsy. Pts are followed by quarterly measures of BP, HbA1C, UAE, and drug compliance. There are annual measures of GFR and a repeat renal biopsy after 5 yrs in the study. The main endpoint is kidney structural changes over time, especially mesangial fractional volume [Vv(Mes/glom)]. Secondary endpoints will be other DN structural measures and measures of kidney function (UAE, GFR). These studies will determine whether RAS blockage in the early stages of DN can prevent the early kidney structural changes in this important disorder. Ancillary studies will evaluate the effects of treatment group on the development and progression of diabetic retinopathy and will develop predictors of study participants' compliance.